Post-CAFA (Class Action Fairness Act of 2005) Amendment of Complaint to Add Defendant Allows Removal to Federal Court by that Defendant of Suit Filed Prior to CAFA’s Effective Date Fifth Circuit Holds
On April 6, 2006, the Fifth Circuit Court of Appeals considered “an issue of first impression for this court: whether amending a complaint to add a defendant ‘commences’ a new suit under the Class Action Fairness Act of 2005 (CAFA),” Braud v. Transport Service Co. of Illinois, 445 F.3d 801, 802 (5th Cir. 2006).
In Braud, the class action petition was filed in August 2004. In April 2005 (after CAFA’s February 18, 2005 effective date), plaintiffs amended their petition to add an additional party-defendant, Ineos. Ineos timely removed the action to federal court on the ground of CAFA. Braud, at 802. In considering plaintiffs’ motion for remand, the district court concluded that the amendment did not draw the action into the ambit of CAFA and remanded the matter to state court. The Fifth Circuit reversed.
The sole question on appeal was whether the addition of a new defendant affected the applicability of CAFA. Braud recognized that whether the action was “commenced” after CAFA’s effective date turns entirely upon state law. Braud, at 803. In this regard, the Court explained that the question is not one of “retroactivity” but of “commencement”: “the issue is not whether CAFA should apply to suits commenced before February 18, 2005, but whether the addition of a new defendant commences a new suit.” Id., at 804. In other words, if adding a party-defendant constitutes a new action under state law, then CAFA applies by its terms, not because of retroactivity.
The Fifth Circuit “agree[d] with the Seventh Circuit that amendments that add a defendant commence the civil action as to the added party,” Braud, at 804. It based this holding on two grounds. First, “caselaw holds that generally a party brought into court by an amendment, and who has, for the first time, an opportunity to make defense to the action, has a right to treat the proceeding, as to him, as commenced by the process which brings him into court.” Id. at 805 (citations omitted). Second, “the addition of a new defendant opens a new window of removal under 1446(b).” Id. The full opinion is well worth reading.
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